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Sina jumps - momentum lost?

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record_1 June 22, 2011 (Chinavestor) Despite a strong market day, there are no extreme overbought Chinese stocks.  Sina Corp. (NASDAQ:SINA), one of the most oversold Chinese stocks, jumped over 18% and is gone from the oversold list. Large caps with some momentum include Guangshen Railway (NYSE:GSH), China Telecom (NYSE:CHA), China Mobile (NYSE:CHL) and Melco Crown Entertainment (NASDAQ:MPEL). Stocks of interest on the oversold list include Huaneng Power Int. (NYSE:HNP), and ReneSola Ltd. (NYSE:SOL). Despite huge losses, low volume render the oversold indicator useless in case of Vimicro Int. (NASDAQ:VIMC), Agria Corp. (NYSE:GRO) or Qiao Xing Mobile (NYSE:QXM).

The oversold monitor did work on Tuesday for Sina Corp. (NASDAQ:SINA). The stock was oversold to the extremes and we noted that "This stock offers buying opportunity according to the oversold chart below." List of China stocks likely to pop. With an 18.5% jump in one day, its best for over a year, it's hard to see more upside for the short term. Nevertheless there is a lot of ground left for Sina Corp. (NASDAQ:SINA) to make up.

Guangshen Railway (NYSE:GSH) remained resilient last week and is looking good on the overbought monitor.

Chinese telecoms were also darlings lately with China Telecom (NYSE:CHA) and China Mobile (NYSE:CHL) showing unusual momentum. China Unicom (NYSE:CHU) reported sound smartphone subscriber growth for May just a day before.

Excellent trading stock, Melco Crown Entertainment (NASDAQ:MPEL), soared yesterday along with the market. But this stock is very sensitive to market sentiment and as such investors should exercise caution.

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Huaneng Power Int. (NYSE:HNP) is considered oversold albeit its home market is Hong Kong, determining its ADR price. ReneSola Ltd. (NYSE:SOL) is the most oversold solar play and has more upside potential than downside risk at this point.

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Overbought A technical condition that occurs when prices are considered too high and susceptible to a decline. Overbought conditions can be classified by analyzing the chart pattern or with indicators such as the one above. A sharp advance from $15 to $30 in 2 weeks might lead a technician to believe that a security is overbought. Or, a security is sometimes considered overbought when the stock is trading out of its trading envelope and is approaching the theoretical high. It is important to keep in mind that overbought is not necessarily the same as being bearish. It merely infers that the stock has risen too far too fast and might be due for a pullback.

Oversold A technical condition that occurs when prices are considered too low and ripe for a rally. Oversold conditions can be classified by analyzing the chart pattern or with indicators such as the one above. A sharp decline from $30 to $15 in 2 weeks might lead a technician to believe that a security is oversold. Or, a security is sometimes considered oversold when the stock is trading below its trading envelope and is approaching theoretical lows. It is important to keep in mind that oversold is not necessarily the same as being bullish. It merely infers that the security has fallen too far too fast and may be due for a reaction rally.



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